Choosing an ERP system is one of the most strategic decisions for mid-market companies and their CEOs face a significant dilemma. Should I choose a system for today, or for how my company may look in 5 to 10 years? Should I go for a full system or start small with a limited number of functions? Should I try to cover 100-percent of my needs or only aim for a fraction of them? Do I have to cover all my requirements with one single ERP system? Should I go for a comprehensive, full function system requiring a 12-18 month implementation, or for a simpler system with fewer functions that could be implemented in weeks? What balance will get me the best return on my investment?
I could go on and on with questions that are all relevant. But instead I would suggest reversing the thought process, so rather than trying to solve all my outstanding issues with a new system (usually it would replace something already used), I would suggest thinking about how to improve what I already have. The principle behind this approach is that sometimes in terms of ERP software, in aiming for the best, we ignore the ‘better’ solution.
The value of an ERP system lies in its integration across a company and the data gathered when using it. So why not start with a modern solution, well integrated and covering 80-85-percent of your functional needs? We all know that the last mile is by far the most costly and surely the one that has the most problematic ROI. So why look for perfection when 85-percent would help you make a giant step towards efficiency? Go with as standard a system as you can to start with. Implementation will be very significantly reduced, both in terms of cost (three to five times cheaper) and duration (up to 10 times faster, in a matter of weeks). This properly integrated system will immediately make your processes more fluid, improve cross-functional collaboration, reduce operating costs and most importantly, help you understand what you really need for the next step.
I encourage you to have a look at what our customer, Omega Refrigeration, did. It chose to go standard and not only did its ERP system go live in just 44 days, but it started to see benefits just a few weeks after the implementation. Very soon after deployment, Omega Refrigeration was able to plan the expansion of the system!
One of the biggest mistakes we often see is attempting to replicate existing business processes within a new system. This implies significant tweaks in the ERP system through customization. On top of making your life miserable for future upgrades, this also changes the way your solution behaves and you won’t benefit from all the best practices that has led to the development of the built-in processes. Performance can also be dramatically reduced and future evolutions will be more difficult to leverage.
Implementing a new ERP system is a great opportunity to re-think your processes. We love to think we are different, and guess what, it’s true! But being different doesn’t mean we are totally unique. Step back and try to honestly define what makes you better and more competitive than your competition (at the end of the day, this is what counts) and you will probably end up with two or perhaps three processes that are really distinctive. At most 5-percent of your system will recognize this difference, not 50-percent!
At the end of April this year, I had the privilege of visiting the Marussia F1 Team (one of our customers) in Banbury, England and talked to Kevin Lee, their Operations Manager. He uses an expression that I often use, “walk before you run”. This is the principle he applies to everything he does in improving the team’s competitiveness in Formula 1. So he enacted this principle when implementing his new ERP system and succeeded: implementation time – eight weeks, number of specific developments to address F1 needs – 0.
So go for standard solutions and then, after a period of usage (say 9 to 12 months), make informed decisions on where to put your investment to differentiate yourself in the market.
When that’s done, make sure you have as many people as possible using your ERP system. ERP software is not a specialist play – it’s not only for accountants or plant managers. Everyone, one way or another, should use the system starting with you. Why is this so important? Your ERP system will be your decision making tool and based on the collected data, you will run reports, analysis or even simulations.
These activities will really bring value if your database truly represents your business. To get there you need to ensure everyone contributes to it – the experienced and the non-technical alike. You can even open your system to those outside of your own organization who also contribute to your business. Your customers, your partners, and your suppliers can definitely enrich your data set, which will help you make better decisions.
I said that integration was key. Integration means encouraging people in different functions to work together. This will open up a new field of efficiency – collaboration. ERP software will help you organize the social nature of your business and support a better, more natural and organized way of collaborating for greater efficiency, better problem solving, but also to promote innovation.
In a nutshell, ‘start small’ with a standard solution across your company and progress quickly (in weeks), learning by experience instead of writing books, encouraging usage across and outside your organization, and make informed decisions for additional investments that will make you more competitive. Before running like Usain Bolt, make sure you can walk!
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Guest Blog: Walk Before You Run – Choosing the Right ERP System,